Nutter proposes cuts to future city elected officials' pensions

Posted: October 19, 2012

ARE THE DAYS of elected officials riding off into the sunset clutching six-figure pension checks going to end?

Mayor Nutter is trying to amend pension rules for future elected officials with a goal of moving them into a lower-benefit and lower-cost plan alongside some city workers.

"Our view of it is that elected officials should be getting the same pension as other employees, and under this legislation they would be," Finance Director Rob Dubow said.

The proposed changes would not impact current elected officials. Still, City Council would have to approve the plan and the body has been protective of benefits for their own.

Asked if he could support changes for future elected officials, Council President Darrell Clarke was cautious, saying simply, "Conceivably."

Currently, elected officials get a retirement plan that allows them to collect pensions as high as their full salaries. But the city is proposing to move future elected officials to a hybrid plan that combines a lower-benefit pension with a 401(k).

For example, former City Council President Anna Verna, who retired in January, collects an annual pension of $130,707. If she were subject to the terms of the hybrid plan, a back-of-the-envelope calculation shows that her defined benefit would be $32,676. A 401(k), with a contribution match from the city, could supplement that.

The plan was tucked into legislation that Nutter sent to Council last week. The bill would mandate putting future non-union hires into the hybrid plan, as well as a small number of union workers.

Nutter said that the changes would save money. He wants the city's blue- and white-collar workers to agree to contracts with this provision, but those unions have opposed pension changes. That opposition could also put pressure on Council to derail the bill.

Clarke has not formally introduced the bill and said Thursday that he needed more time to review the proposals. He could not recall if he had specifically discussed the proposals for elected officials with the administration.

"They may have mentioned it," Clarke said.

Several other Council members declined to comment, saying they had not seen the bill.

Critics have slammed Council members over benefits before. Notably, they took heat over the Deferred Retirement Option Plan (DROP), a controversial lump-sum-benefit plan that many members entered. Nutter decried DROP as too costly, but Council kept it, although they barred future elected officials.

Currently, city elected officials get a pension calculated by taking the official's average final compensation and multiplying it by 3.5 percent and then multiplying again by number of years served. It caps at 100 percent of the final compensation number.

Under the hybrid plan, the average final compensation would be multiplied by 1.25 percent, and the credit for years served would cap at 20. In addition, the city will match of up to 1.5 percent of salary in 401(k) contributions.

Elected officials pay a higher contribution rate to their pensions than other city workers, giving 7.3 percent of salary. It is not clear what future elected officials would pay for the hybrid plan, but Dubow said it would likely be less.


Contact Catherine Lucey at luceyc@phillynews.com or 215-854-4172. Follow her on Twitter @PhillyClout. Read her blog at phillyclout.com.

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